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Ex-PBOC Head Calls for Policy Boost to Hit China Growth Goal
(Bloomberg) -- China needs to “appropriately” ramp up support to achieve the government’s economic growth target of about 5% this year, the former central bank chief Yi Gang said.
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Yi — who was governor of the People’s Bank of China until earlier this year — said that the central bank could do more to support the property sector, according to remarks carried this week by the official paper affiliated with the Chinese People’s Political Consultative Conference, the nation’s top political advisory body.
Yi recommended “appropriately increasing” macroeconomic policies to support the expansion of domestic demand, and giving “full play” to the use of structural monetary policy to support the housing sector.
China’s economy is still in the “recovery phase” Yi said. “If you look at the rest of the world, it took about a year for consumption to basically recover after the pandemic — but it’s only been half a year in China,” he added.
Yi’s comments come as policymakers weigh the effectiveness of measures taken so far to shore up growth in the world’s second-largest economy. Some sectors have shown signs of stabilization in recent weeks, with heftier stimulus boosting consumer spending and factory output.
People in China will gradually spend more, helping generate more income and consumption, Yi said. However “households to a certain extent have formed expectations of salary cuts, a deflationary psychology, and a tendency to increase savings and reduce liabilities,” he added.
He said that the rapid expansion of lending to the technology and innovative industries hasn’t been able to fully compensate for the slowdown in real estate loans this year.
China’s government has been rolling out piecemeal support policies since July when the Politburo — the ruling Communist Party’s top decision-making body — called for more support to shore up growth and help the real estate sector.
On Wednesday, China’s leaders pledged to coordinate planning for the economy into 2024 and pushed authorities to accelerate the adoption of policies to support the nation’s recovery.
The State Council — China’s Cabinet — met to assess a report on “the supervision and research” to promote the economy’s sustained recovery, according to the official Xinhua News Agency. The regular meeting was chaired by Premier Li Qiang.
Based on suggestions collected for that report, authorities called for relevant departments to “coordinate and conduct in-depth research on the planning of next year’s economic work” and “accelerate” the introduction of policies as they consolidate the economic recovery.
--With assistance from Li Liu and Tom Hancock.
(Updates with more details from second paragraph)
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